Use the following information to determine the gross margin for IntelManufacturing for the year just ended (all amounts are in thousands ($ 000’s) of dollars:

            Accounts payable, 1/1                                                        1,700

            Accounts payable, 12/31                                                    1,500

            Depreciation on factory equipment                                    2,500

            Direct labor                                                                        8,000

            Direct materials inventory, 1/1                                           8,000

            Direct materials inventory, 12/31                                       1,000

            Finished goods inventory, 1/1                                         20,000

            Finished goods inventory, 12/31                                     21,300

            Indirect labor                                                                      1,600

            Indirect materials used                                                       1,500

            Purchases of direct materials                                              8,000

            Sales                                                                              $21,800

            Utilities expense, factory                                                     900

            Work in process inventory, 1/1                                          1,800

            Work in process inventory, 12/31                                    10,000

Assume that you are the accountant for Computer Consultants. Prior to this year, Computer Consultants operated out of a leased office. However, the company purchased its own office building this year. The building is in an area where real estate values have been increasing an average of 6 percent per year.

The owner of Computer Consultants has asked why you recorded depreciation on the building if real estate values are appreciating. How would you explain this?

Summarized data for 2016 (the first year of operations) for Gorman Products, Inc., are as follows:

a. Prepare an income statement based on full absorption costing.
Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.

b. Prepare an income statement based on variable costing.
Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.

c. Assume that you must decide quickly whether to accept a special one-time order for 1,000 units for $15 per unit.

Which income statement presents the most relevant data? Answerabsorption costingvariable costing

Determine the apparent profit or loss on the special order based solely on these data.
Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number.

$Answer

d. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?
Select the most appropriate statement.

Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs.

Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs.

Karsted Air Services is now in the final year of a project. The equipment originally cost $35 million, of which 90% has been depreciated. Karsted can sell the used equipment today for $8.75 million, and its tax rate is 30%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000. Marble Construction estimates that its WACC is 10% if equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to 10.8%. The company believes that it will exhaust its retained earnings at $2,500,000 of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects: Project Size IRR A $650,000 14.0% B 1,050,000 13.5 C 1,000,000 11.2 D 1,200,000 11.0 E 500,000 10.7 F 650,000 10.3 G 700,000 10.2 Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects should be accepted? Project A Project B Project C Project D Project E Project F Project G What is the firm's optimal capital budget? Write out your answer completely. For example, 13 million should be entered as 13,000,000. $

Presented below are a number of balance sheet items for Sarasota, Inc. for the current year, 2020.

Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of debt investments (trading) are the same. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment.)

Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate

that it will enable them to earn an additional $600,000 after tax. What would be the impact on

earnings per share if the raise the $1,000,000 by:

a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share

     can be coverted into 10 shares of Peyton common stock?

b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into?

     5 shares of Peyton common stock?

c) $500,000 of each of the above?

Presented below are the balance sheets of Trout Corporation as of December 31, Year 1 and Year 2, and the income statement for the year ended December 31, Year 2. The statement of retained earnings for the year ended December 31, Year 2 is on the next page. All dollars are in thousands.

Trout Corporation Balance Sheets December 31, Year 1 and Year 2 Assets Year 1 Year 2 Cash $ 85 $ 127 Accounts receivable 245 253 Less: Allowance for doubtful accounts (9) (11) Prepaid insurance 15 9 Inventory 225 234 Long-term investment 65 42 Land 160 160 Buildings and equipment 250 300 Less: Accumulated depreciation (75) (100) Trademark 25 22 Total Assets $ 986 $1,036 Liabilities & Stockholders’ Equity Accounts payable $ 50 $ 36 Salaries payable 9 6 Deferred tax liability 15 18 Lease liability -- 75 Bonds Payable 275 125 Less: Discount (26) (24) Common Stock 250 280 Paid-In Capital –in excess of par 75 105 Preferred Stock - 70 Retained Earnings 338 345 Total Liabilities & Stockholders’ Equity $ 986 $ 1,036 Trout Corporation Income Statement For the Year Ended December 31, Year 2 Net sales revenue $ 380 Investment revenue 12 Operating Expenses: Cost of Goods $ 150 Salaries expense 58 Depreciation expense 35 Trademark amortization 3 Bad debts expense 8 Insurance expense 20 Bond interest expense 45 319 Operating Income $ 73 Other Income (Expense): Loss on building fir $(27) Gain on sale of investments 4 (23) Pre-Tax Income from Continuing Operations $ 50 Less: Income Tax Expense: 25 Net Income $ 25 Additional Information: 1. Shareholders were paid cash dividends of $18 million. 2. A building that originally cost $40 million, and which was one-fourth depreciated, was destroyed by fire. Some undamaged parts were sold for $3 million. 3. Investment revenue includes Trout Corporation's $7 million share of the net income of Bass Corporation, an equity method investee. 4. $30 million par value of common stock was sold for $60 million, and $70 million of preferred stock was sold at par. 5. A long-term investment in bonds, originally purchased for $30 million, was sold for $34 million. 6. Pretax accounting income exceeded taxable income causing the deferred income tax liability to increase by $3 million. 7. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $90 million. Annual lease payments of $15 million are paid at January 1st of each year starting in Year 2. 8. $150 million of bonds were retired at maturity.

Required: Use the EXCEL worksheet template provided. There are three tabs- 1. Direct Method Statement of Cash Flows (SCF) 2. Spreadsheet for preparing the SCFs. This is where you show your work 3. Cash flows from Operating Activities – CFOs Indirect Method A. In the tab labeled Direct Method SCFs,

Prepare a statement of cash flows for Trout Corporation using the direct method of reporting cash flows from operating activities for the year ended December 31, Year 2. Show your work in the second tab labeled Spreadsheet for SCFs. You can use either the spreadsheet method, t-account method, or a combination of both. Included are some t-accounts to help you. For both the direct and indirect method you will need to analyze the impact the Allowance for doubtful accounts has on accounts receivable and cash. B. In the third tab, prepare the operating activities section only for the statement of cash flows for Trout Corporation using the indirect method for the year ended December 31, Year

A recent 10-year study conducted by a research team at the Medical School was conducted to assess how age, blood pressure, and smoking relate to the risk of strokes. Assume that the following data are from a portion of this study. Risk is interpreted as the probability (times 100) that the patient will have a stroke over the next 10-year period. For the smoking variable, define a dummy variable with 1 indicating a smoker and 0 indicating a nonsmoker.

Risk Age Blood Pressure Smoker

12 57 150 No

26 60 165 No

11 59 155 No

57 86 170 Yes

28 59 196 Yes

50 76 189 Yes

17 56 155 Yes

32 78 120 No

37 80 135 No

15 78 98 No

22 71 152 No

36 70 173 Yes

15 67 135 Yes

48 77 209 Yes

14 60 199 No

36 82 119 Yes

8 65 166 No

34 82 125 No

3 61 117 No

39 60 208 Yes

(a) Develop an estimated multiple regression equation that relates risk of a stroke to the person's age, blood pressure, and whether the person is a smoker. Let x1 represent the person's age. Let x2 represent the person's blood pressure. Let x3 represent whether the person is a smoker. If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)

=______ +_________ x1 + ________x2 + ________x3

(c) What is the probability of a stroke over the next 10 years for Art Speen, a 68-year-old smoker who has a blood pressure of 173? If required, round your answer to two decimal places.

_____________

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $455,000; Allowance for Doubtful Accounts has a credit balance of $4,000; and sales for the year total $2,050,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $19,600.

a. Determine the amount of the adjusting entry for uncollectible accounts.
$

b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

c. Determine the net realizable value of accounts receivable.
$

Note Receivable

Quick Tire and Lube received a 120-day, 9% note for $84,000, dated April 9, from a customer on account. Assume 360 days in a year.

a. Determine the due date of the note.

b. Determine the maturity value of the note.
$

c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank.

Providing for Doubtful Accounts

At the end of the current year, the accounts receivable account has a debit balance of $1,147,000 and sales for the year total $13,000,000.

The allowance account before adjustment has a credit balance of $15,500. Bad debt expense is estimated at 3/4 of 1% of sales.

The allowance account before adjustment has a credit balance of $15,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $49,600.

The allowance account before adjustment has a debit balance of $5,700. Bad debt expense is estimated at 1/4 of 1% of sales.

The allowance account before adjustment has a debit balance of $5,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,300.

Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.